Friday, November 14, 2008

The Tom DeLay scandal has been with us longer than most kindergartners. Six years have passed since the controversial 2002 election, when DeLay sprang his audacious plan to use possibly illegal corporate money to bury Texas Democrats. DeLay’s Texans for a Republican Majority PAC (TRMPAC) and the Texas Association of Business (TAB) teamed with Texans for Lawsuit Reform to orchestrate a GOP takeover of the Texas House. These efforts made Midland Republican Tom Craddick the House Speaker and let Delay reconfigure Texas’ congressional districts, adding six new Republican seats.Read the article at the Texas Observer

The DeLay Scandal Turns SixCatching up with the players from the disputed 2002 election.

Andrew Wheat | November 14, 2008TEXAS OBSERVER

The Tom DeLay scandal has been with us longer than most kindergartners. Six years have passed since the controversial 2002 election, when DeLay sprang his audacious plan to use possibly illegal corporate money to bury Texas Democrats. DeLay’s Texans for a Republican Majority PAC (TRMPAC) and the Texas Association of Business (TAB) teamed with Texans for Lawsuit Reform to orchestrate a GOP takeover of the Texas House. These efforts made Midland Republican Tom Craddick the House Speaker and let Delay reconfigure Texas’ congressional districts, adding six new Republican seats.

The disputed election prompted a flurry of civil and criminal court cases. Defeated Democrats sued TRMPAC and TAB. Travis County District Attorney Ronnie Earle indicted DeLay and other TRMPAC and TAB leaders on charges of criminally tapping more than $2 million in corporate funds to influence the election. The indictments effectively evicted House Majority Leader DeLay from the U.S. House.

The criminal case still crawls along. The Texas Association of Business recently copped a guilty plea, retirement is looming for prosecutor Ronnie Earle, and a fix may be in on the criminal charges against DeLay. Some major players who pushed the electoral limits in 2002 have paid a price. Many others have eluded repercussions, been appointed to political offices or find themselves awash in political-consulting fortunes. Six years after the Republican champagne flowed, the Observer checked up on lead players in the DeLay scandal.

First FamilyRecent years have brought upheaval to the First Family of the TRMPAC scandal. In September 2005, Tom DeLay was indicted in Texas on money-laundering charges stemming from TRMPAC’s campaign shenanigans. In the eight months following his indictment, DeLay went from being one of the most powerful men in the nation to a veritable has-been.

DeLay resigned from Congress in April 2006 amid serious questions about his ability to win re-election in his own Sugar Land district. Out of Congress, he launched two ventures that operate out of the same office building in Washington. One is the consulting firm First Principles LLC. While corporate clients may be flocking to the firm, political campaigns don’t appear to be buying its advice. A search of federal political committees, courtesy of Congressional Quarterly’s MoneyLine, reveals that First Principles has received just one PAC payment. Chicago’s conservative Family-PAC paid DeLay—the former PAC-money king—the royal sum of a $4,000 honorarium.

Last year DeLay also launched the Coalition for a Conservative Majority, which he billed as his camp’s answer to MoveOn.org, the decade-old online hotbed of liberal activism, which operates one of the nation’s fattest PACs. Despite its prominent links on DeLay’s blog, the Coalition has had little visible impact.

DeLay’s slipping traction is not surprising, given his sudden, enormous loss of power. DeLay blames his downfall, at least partly, on reporters. “I haven’t been found guilty of anything,” he told the Houston Chronicle at the recent Republican National Convention, “yet my first name is ‘Discredited’ in the media.”

One discrediting of the DeLay name occurred in April 2005. That’s when The New York Times reported that DeLay’s political committees—including TRMPAC and Americans for a Republican Majority Committee (ARMPAC)—had paid DeLay’s wife and daughter more than $500,000 during the past four years. To counter any suggestion of impropriety, ARMPAC issued a statement at the time saying “Mrs. DeLay provides big picture, long-term strategic guidance” and the DeLays’ daughter, Danielle Ferro, “is a skilled and experienced professional event planner.”

Yet it is not clear that the market for these skills survived DeLay’s fall. Christine DeLay received no payments from PACs unaffiliated with her spouse in recent years and received her last ARMPAC checks in December 2005. The $12,500 that TRMPAC paid Danielle Ferro in late 2003 were the last major political payments that TRMPAC ever made. Ferro still works for her father, handling appointments for First Principles.

DeLay’s brother, Randy, appears to be the family member least affected by the scandals, perhaps because he parted company with his relatives before Tom DeLay’s fall. To bounce back from a 1992 bankruptcy, Randy DeLay formed the DeLay Group lobby firm, which has grossed an average of more than $400,000 a year during the past decade. Some of Tom DeLay’s earlier ethics troubles occurred when he intervened on behalf of his younger brother’s lobby clients. These problems may have contributed to the reported estrangement of the DeLay brothers. Yet Randy DeLay’s business has continued apace, even after he dropped “DeLay” from his firm name in 2002 and after his brother lost power. Randy DeLay’s clients today include Time Warner Cable, the Brownsville Navigation District and Motor Coach Industries. (This summer a Motor Coach bus crashed on a highway near Sherman, killing 17 Vietnamese-American church members.)

Randy DeLay and his niece, Danielle Ferro, did not respond to requests for comment. Tom DeLay’s spokesperson at First Principles, Shannon Flaherty, made one attempt to respond but could not be reached by press time.

Electoral LawsuitsFor six years, TRMPAC and TAB have defended themselves from civil and criminal cases alleging that they improperly influenced Texas’ 2002 elections to establish a Republican majority in the Texas House. In the first case to come to trial, five Democrats defeated by TRMPAC-backed Republicans sued three TRMPAC officials for allegedly violating Texas election laws. The state district judge overseeing the case ruled in 2005 that TRMPAC broke state law by failing to report more than $600,000 in corporate contributions (it’s illegal in Texas for candidates to spend corporate money on political activities). In the end, Judge Joseph Hart agreed with the plaintiffs and ordered former TRMPAC Treasurer Bill Ceverha to pay $196,600 in damages.

Ceverha is a former state lawmaker with close ties to Dallas oil magnate Louis Beecherl, who bankrolled TRMPAC and Craddick. After the 2002 election, Ceverha served on Craddick’s speaker transition team. Craddick then appointed him to the board of the Texas Employees Retirement System (ERS). This trustee of the $24 billion state pension fund then declared personal bankruptcy in 2005 to avoid paying his TRMPAC judgment. In addition, TRMPAC donors helped pay some of the more than $800,000 that Ceverha owed to the legal team that lost his case. TRMPAC’s No. 1 donor, Houston homebuilder Bob Perry, gave Ceverha $100,000. Ralph Ellis of Irving, who heads an oil company that pumped corporate cash into TRMPAC, loaned Ceverha $50,000. A school-voucher group maintained by TRMPAC donor James Leininger also handed Ceverha a 2005 lobbying gig. Ceverha’s bankruptcy filings note that his income jumped from less than $85,000 a year in the first four years of the millennium to more than $235,000 a year when his trial heated up at mid-decade. Ceverha’s more recent lobby disclosures suggest diminishing returns, with lobby contracts worth up to $35,000 in 2007 and none in 2008. All the while, Ceverha has continued to serve on the board of the state employees pension fund.

Asked about the meaning of the TRMPAC scandal, Ceverha said, “What I would like to say is so outrageous that, knowing the slant of your paper, I don’t think I should tell you.” Encouraged to do so, Ceverha said, “Think about the fact that there have been people out there dangling in the wind for years and spending a personal fortune for no good reason.”

Two of the three attorneys who tried the civil case against Ceverha came from the now-defunct Austin firm Ivy Crews & Elliott. Cris Feldman has since joined the Houston criminal defense firm Rusty Hardin & Associates. In an odd twist, that firm now represents TRMPAC fundraiser Warren Robold, one of four TRMPAC defendants indicted by Earle (the firm reportedly has Feldman sealed off from the Robold case). Feldman’s ex-partner Joe Crews is now at his own firm. Crews and the third plaintiff lawyer, David Richards (who once was married to the future Gov. Ann Richards), intend to eventually resume their civil case against two DeLay cronies, John Colyandro, the former TRMPAC director, and Jim Ellis, the former ARMPAC director. The plaintiff attorneys must wait until the criminal case against Ellis and Colyandro is resolved.

A former employee of Karl Rove’s direct-mail shop, Colyandro’s main job has been running the Texas Conservative Coalition, which he founded in 1985. The Conservative Coalition accounts for most of the $180,387 that Texas PACs have reported paying Colyandro since 2003. Colyandro’s lawyer said the criminal charges have made it difficult for his client to make a living and “cost him a marriage.” “As a Democrat, I’m still angry at what happened in the Lege in 2002,” said Austin attorney Joe Turner. “From a legal standpoint, I don’t think [Colyandro] violated the law. It’s time to end this nightmare for everyone and move on.”

When the TRMPAC mess erupted in 2003, Colyandro and Ellis landed supplemental income, reporting their first Texas lobby contracts. ARMPAC was one client that paid Ellis to lobby that year in Austin, where Ellis camped out to help DeLay pass congressional redistricting. Ellis and Colyandro both reported receiving 2003 lobby contracts through Virginia-based Performance and Results International LLC (see “There is Always a Bright Side,” March 4, 2005). That firm’s main business number had been disconnected when the Observer called recently. Jim Ellis’ attorney, J.D. Pauerstein of San Antonio, said that his client is “working in some consulting capacity” in the Washington area but that he did not know the details.

Then there are two lawsuits involving the Texas Association of Business. Defeated Democratic House candidates sued TAB and its corporate contributors. The plaintiffs alleged that TAB illegally spent $1.7 million in corporate funds on ads promoting 24 Republican legislative candidates in 2002. Plaintiffs also sued lobbyist Mike Toomey, who raised corporate funds for TAB, mostly from insurance companies. Toomey, TAB and the corporate donors agreed this fall to settle with some of the plaintiffs for an undisclosed sum. But a few plaintiffs are still pressing their case against TAB President Bill Hammond and three of the insurers that bankrolled TAB’s political ads.

Meanwhile, defense attorney Andy Taylor continues to benefit from the DeLay-TAB scandal. Taylor is representing defendants in the TAB civil cases. That’s after Taylor profited handsomely from the redistricting fight in 2003. He billed taxpayers more than $750,000 to vet DeLay’s redistricting plans for Texas Attorney General Greg Abbott.

Legal discoveriesRegardless of how the remaining TRMPAC and TAB litigation turns out, these lawsuits pulled back the curtains on Texas’ 2002 elections. Plaintiffs in lawsuits have the right to inspect documents relating to their case and may compel key sources to answer case-related questions. This “legal discovery” process is the source of much of what is known about the roles of TRMPAC and TAB in the 2002 election.

TRMPAC’s fundraising consultants were key sources of information about DeLay’s money machine. For instance, in September 2002, GOP fundraiser Susan Lilly and state Rep. Beverly Woolley solicited business leaders in Woolley’s hometown of Houston on TRMPAC’s behalf. A typed memo of their itinerary—obtained through discovery—contains handwritten notes about the political wish list of each donor visited that day and how much money they committed to TRMPAC. The Republicans who took control of the Texas House in 2002 helped enact much of this wish list (see “Rate of Exchange, TO, March 12, 2004). The TRMPAC scandal does not appear to have hurt the careers of Lilly or Woolley, neither of whom has been charged with wrongdoing. Speaker Craddick appointed Woolley chair of the powerful House Calendars Committee. Meanwhile, Lilly & Co. of Austin has collected almost $5 million from Texas and federal PACs since 2003. Susan Lilly’s firm remains a leading fundraiser for the Republican Party of Texas and many GOP candidates.

The now-indicted Warren Robold, DeLay’s longtime fundraiser, collected most of TRMPAC’s legally troublesome corporate money. Robold mostly solicited companies that had few interests in Austin but a keen interest in DeLay’s congressional pull. Unlike Lilly’s, Robold’s fundraising business doesn’t appear to have survived DeLay’s fall. In 2003, he received payments of $13,000 from Florida Congressman Dave Weldon, $13,650 from the Republican Party of Texas and $33,009 from ARMPAC. Robold collected his last federal PAC payments in the first quarter of 2004 and then fell off the political-fundraising radar screen. Robold’s attorney, Andy Drumheller, didn’t return calls about his client.

Legal discovery also revealed how a few men made up the nerve center that controlled the TRMPAC and TAB operation. Colyandro, TAB President Bill Hammond, Texans for Lawsuit Reform PAC Director Matt Welch and lobbyist Mike Toomey met regularly during the 2002 campaign to coordinate support for a core slate of Republican House candidates. And discovery showed that TRMPAC paid Kevin Brannon, a onetime aide to former Senator Phil Gramm, to vet which GOP House candidates would receive TRMPAC support. Many Brannon interviews broached the topic of Craddick’s speaker campaign.

Kevin Brannon recently helped launch a GOP consulting firm called the Patriot Group. Other Patriots include Matt Welch and homebuilder Bob Perry spokesman Anthony Holm (see “Patriots for Hire,” TO, June 1, 2007). After the 2002 election, Mike Toomey served as Governor Rick Perry’s chief of staff for two years before returning to the lobby, where he since has billed clients up to $5.5 million.

Criminal casesTwo weeks before Travis County voters elected Earle aide Rosemary Lehmberg to succeed her retiring boss as district attorney, Ronnie Earle settled the remnants of his criminal case against TAB. Mirroring the civil cases, Earle initially charged TAB with illegally spending $1.7 million in corporate funds on ads that promoted 24 Republican legislative candidates. From the outset, TAB was a tougher criminal case than TRMPAC. Unlike TRMPAC, which funneled corporate funds to state candidates, TAB spent corporate money on independent political expenditures, a practice invoking greater legal protections. State District Judge Mike Lynch dismissed the heart of Earle’s TAB case in 2006. He ruled that TAB’s ads—which attacked Democrats and lauded Republicans—did not explicitly tell people whom to vote for. Lynch wrote that the TAB ads “severely test, but do not cross” this line.

In the recent settlement, TAB pleaded guilty to a misdemeanor carrying a $10,000 fine. The association admitted that it illegally used its corporate money to pay President Bill Hammond and another TAB lobbyist to barnstorm the state to promote Republican legislative candidates. In an apology that he read at the time of the settlement, Hammond said, “I now recognize that while working as a salaried employee of the Texas Association of Business it was a violation of the law to expressly advocate for the election of these candidates.” Hours later he shifted gears. “Six years of political persecution by Ronnie Earle has come to an end,” Hammond said, “with a misdemeanor over a bookkeeping error.”

This dual response may explain why plaintiff attorney Joe Crews has not been able to convince himself that the legal showdown over the 2002 election will safeguard election laws. “My guess is that it has made the cheaters more sophisticated,” he said. “I’m not real optimistic about these kinds of people.” A bit more optimistic, Feldman said the legal cases demonstrated that “no one is above the law” even as they showed that “the relationship between state officials and large corporate interests necessitates constant vigilance.”

Earle now bequeaths to Lehmberg the remains of the criminal cases against the TRMPAC four: DeLay, Colyandro, Ellis, and Robold. The most clear-cut of these charges accuse Colyandro, Ellis and Robold of soliciting or accepting corporate contributions.

DeLay, Colyandro and Ellis also face criminal money-laundering charges. A panel of the Austin-based 3rd Court of Appeals ostensibly ruled in August against constitutional claims that Colyandro and Ellis raised in a pretrial appeal. Yet that ruling—written by Justice Alan Waldrop (who had helped Texans for Lawsuit Reform fend off TRMPAC-related subpoenas before he joined the court)—contained an unsolicited gift for the TRMPAC defendants. The opinion said that the Texas money-laundering law in effect in 2002 applied to cash but not to the checks that TRMPAC allegedly used to route $190,000 in illegal corporate cash to Texas House candidates via a Republican Party account in Washington (see “DeLay’s Blank Check,” TO, September 19, 2008). If it stands, this ludicrously literal interpretation of the law eviscerates the remaining case against Tom DeLay. Initially, District Judge Pat Priest must decide what to do with Waldrop’s editorializing about the TRMPAC money-laundering charges. Ultimately, Republican-dominated appeals courts likely will decide the issue.

With TRMPAC money-laundering charges teetering, the greatest legal threat to DeLay appears to have shifted from Austin to the U.S. Department of Justice in Washington. Imprisoned lobbyist Jack Abramoff—who was a big promoter of both Bush and DeLay—pleaded guilty to federal corruption charges that could have earned him a 12-year sentence. Because Abramoff helped prosecutors win related charges against seven high-level Washington officials, however, a federal judge sentenced Abramoff to just four years in September.

Given Abramoff’s unusually light sentence, DeLay must consider the possibility that Abramoff, whom he once called one of his “closest and dearest friends,” will help the Obama Justice Department continue this ongoing corruption investigation. The biggest fish investigated—but not indicted—in the Abramoff probe are DeLay and retiring California Congressman John Doolittle, the king of earmarks. Ratting out Tom DeLay may have been part of the plea bargain that the feds hammered out with Abramoff. Six years after his political machine delivered in Texas, Tom DeLay still may get his day in court.

Andrew Wheat is research director at Texans for Public Justice, a nonpartisan watchdog that has filed ethics complaints against TRMPAC, Justice Alan Waldrop, and Bill Ceverha